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Hedge funds in the Cayman Islands

Date: Monday, June 16, 2008
Author: Castlehall.com

A few days ago, the Cayman Islands Monetary Authority published their "Investments Statistical Digest", which is a summary of the "e-reports" that all Cayman hedge funds now have to submit to the local regulator.

The statistics cover 5,052 Cayman domiciled hedge funds which filed as of December 31, 2006. This represents 81% of the funds which were due to publish their annual returns as of that date (although what happened to the remaining 19% remains unclear).

The key figures are:

- The 5,000 funds included in the survey had a net asset value of $1.38 trillion

- In all, Cayman reports some 9,413 regulated hedge funds as of December 31, 2007 - these include entities which were formed in 2007, as well as those which do not have December 31 year ends and are hence excluded from the 5,052 sample above.

Total net assets of Cayman funds will hence be significantly above the $1.38 trillion noted above (although, as many of these entities will be fund of funds, there will be a lot of "double counting" of industry assets).

- Average leverage is described as 67% although this will, of course, be calculated on an on balance sheet basis and hence significant understate economic leverage obtained via derivatives.

The CIMA database could be a very useful source of information going forward - definitely something for investors to monitor.